Back on track? (KOR)

Dec 05,2018

Hong Nam-ki — the nominee for the posts of deputy prime minister for the economy and finance minister — admitted some of the flaws of the Moon Jae-in administration’s push for so-called income-led growth, a pillar of the government’s economic policies. In a confirmation hearing at the National Assembly on Tuesday, he promised to moderate the pace of increases in the minimum wage and the drastic cut to the now 52 hour workweek.

With regard to the minimum wage hikes in particular, Hong said he will find ways to rationally determine an appropriate level of increase after next year. We welcome his flexible approach to tackle genuine complaints from businesses suffering from rapid wage hikes and reduced work hours.

Nevertheless, Hong said that he will maintain the liberal administration’s policy direction. He reiterated the government’s insistence that income-led growth is the right direction for our economy. “I believe the effects of the policy will appear during the second half of next year,” he said. On other urgent issues, such as labor reform, he answered in principle, which stopped way short of easing concerns of opposition lawmakers.

We understand that a nominee for public office can hardly oppose the government’s policy direction. But if he had not wanted to be dismissed as a “government puppet or enforcer,” he should have presented more persuasive and convincing ideas to address our economic problems rather than blindly follow the administration’s policies.

In yesterday’s confirmation hearing, Hong underscored the importance of communication with the market. A countless number of self-employed, mom-and-pop store owners and small- and mid-sized companies are all troubled by the rapid increases in the minimum wage. The income gap has also been widening despite government efforts to help the poor. The government’s excessive intervention in the market resulted in the exact opposite of what it was attempting.

According to a JoongAng Ilbo survey on the Moon administration’s economic policy, some 43 percent viewed it negatively, while 22 percent viewed it positively. A new economic team must prove its abilities through concrete results.

It is time for the government to change course. The administration must face reality instead of burying its head in the sand. It must allow economic officials to do their best to get our economy back on track — instead of simply waiting for orders from the Blue House. The market is watching closely.